President Trump on Friday said that the United States would terminate all trade discussions with Canada, “effective immediately,” over the country’s plan to begin collecting digital services taxes that will affect U.S. technology giants.
Mr. Trump described those taxes as a “blatant attack” on American firms, as he promised on social media that he would inform Canada within the next seven days about the duties “they will be paying to do business with the United States of America.”
Canada’s 3 percent tax digital services tax has been in place since last year, but the first payments are only due beginning on Monday. Because the tax is retroactive, American companies were preparing to turn over roughly $2.7 billion to the Canadian government, according to a trade group for large tech companies.
The president’s threat to end talks with one of the country’s largest trading partners could unleash chaos on both sides of the border. Tariffs are taxes on imports, the burden for which could fall heaviest on U.S. companies and consumers.
Still, Mr. Trump has frequently brandished imminent plans to penalize other countries with high levies, only to later back down, especially once markets panic over the potential interruptions to commerce.
Mr. Trump’s newest threat arrived just weeks before he is set to reimpose sky-high tariffs on nearly every U.S. trading partner — a set of so-called “reciprocal” rates that he first announced, and quickly suspended, in early April.
“We have 200 countries, you could say 200 countries plus, we can’t do that,” the president said of the work to strike deals. “So, at a certain point, over the next week and a half or so or maybe before, we’re going to send out a letter. We talked to many of the countries, and we’re just going to tell them what they have to pay to do business in the United States.”
Canada and the United States had announced earlier this month that they would get to a new trade deal “within 30 days” — namely, around July 20.
— Matina Stevis-Gridneff contributed reporting
Tony Romm is a reporter covering economic policy and the Trump administration for The Times, based in Washington.
Andrew Duehren covers tax policy for The Times from Washington.
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